ENGAGEMENT & REMEDY GUIDELINES
Call for Public Comments
The Japan Responsible Supply Chains Committee, which is comprised of multi-stakeholder members, and which is operated and supported by the Business and Human Rights Lawyers Network Japan ("BHR Lawyers"), the Global Compact Network Japan ("GCNJ"), and the Civil Society Platform for Japan’s National Action Plan on Business and Human Rights ("BHR-NAP-CSP"), has formulated and announced the draft of "Engagement" and "Remedy" Guidelines for Promotion of Responsible Business Conduct and Supply Chains.
The Guidelines aim to promote constructive dialogues between business and society, strengthen grievance mechanisms, and ensure access to remedies around Japan. The Guidelines also intend to contribute to the development of the legacy of Tokyo 2020, the enrichment of the content of Japan's National Action Plan on Business and Human Rights, and the effective dissemination of the ESG initiatives by Japanese companies.
This project has been conducted under the assistance and advice of the OECD’s Responsible Business Conduct Unit and the ILO Office for Japan and accredited as the Tokyo 2020 Support Program (Sustainability) by the The Tokyo Organising Committee of the Olympic and Paralympic Games.
The overview of the Engagement and Remedy Guidelines is described as below. The Guidelines are comprised of four documents: (0)the introductory document ; (1) the text of Engagement and Remedy Guidelines; (2) the Grievance Centers Guidelines; and (3) the Basic Action for Engagement and Remedy Guidelines.
We welcome your comments on the draft of the Guidelines documents to make the Guidelines more practical and accessible for multi-stakeholders inside and outside Japan. Please send your comments to the following email address. The Guidelines will be finalized based on your comments and published in mid-November, 2019.
Public Comment Period September 2, 2019 - October 18, 2019
Please send comments to:
Business and Human Rights Lawyers Network Japan Secretariat
(Attorney Sakon Kuramoto / Attorney Daisuke Takahashi)
C/O Research Center for Sustainable Peace (RCSP), the University of Tokyo
3-8-1 Komaba, Meguro-ku, Tokyo, 153-8902, JAPAN
Please kindly write your name, organization, and contact information in your message. We will properly keep your personal information based on our personal data protection policy.
(1) E&R Guidelines
(2) Grievance Centers Guidelines
(3) Basic Action for E&R Guidelines
1. International and Domestic Formulations of Norms
The support of governments, civil society and institutional investors for the recognition and implementation of international Responsible Business Conduct (hereinafter "RBC") expectations and instruments, including UN's Guiding Principles on Business and Human Rights (hereinafter "Guiding Principles"), SDGs (Sustainable Development Goals), OECD Guidelines for Multinational Enterprises (hereinafter "OECD Guidelines"), ESG (Environmental, Social and Governance) investments, and the "Responsible Supply Chains" or "Sustainable Global Supply Chains" is growing. Rules, guidance and standards are being formulated internationally and domestically. As a result, Japanese companies or companies operating in Japan (including those established in Japan as subsidiaries and affiliates of foreign companies, the same applies hereinafter) are expected to strengthen grievance mechanisms to deal more actively with complaints and issues raised by various stakeholders with respect to the implementation of RBC expectations, including issues in the supply chain (including value chains and investment chains). (see Introduction Appendix 1, "Background of the Development of these Guidelines").
2. Benefits for Japanese Companies to Strengthen Operational-Level Grievance Mechanisms as Grievance Mechanisms
While the OECD Guidelines have a built-in non-judicial grievance mechanism through the National Contact Points ("NCPs"), strengthening operational-level grievance mechanisms as grievance mechanisms of Japanese companies in the aim of promoting responsible supply chains, enhances the sustainability of Japanese companies themselves and leads to the maintenance and creation of medium-to long-term corporate value, including economic profits.
In other words, the strengthening of grievance mechanisms of Japanese companies has many advantages, such as (i) preventing the occurrence and spread of corporate scandals and related reputational damage and economic loss; (ii) a critical element of effectively implementing due diligence for RBC, as well as CSR procurement and human rights due diligence as referenced in the Guiding Principles; (iii) securing the trust of stakeholders, including business partners and investors, and securing economic profits (including ESG investment); (iv) securing opportunities for on-going and constructive dialogue with stakeholders; and (v) shutting out clearly unreasonable demands or making appropriate responses to malicious behavior of some parties through a transparent complaint handling system. (see Introduction Appendix 2, "Benefits for Japanese Companies to Strengthen the Grievance Mechanism").
In addition, the strengthening of the grievance mechanism at Japanese companies will contribute to the improvement of the sustainability of the Japanese economy and Japanese society as a whole in line with SDGs and ensure access to remedies as requested by Guiding Principles.
On the other hand, in the event that a company is unable to sufficiently respond to stakeholder complaints and issues raised, and as a result, becomes the subject of a scandal that impairs corporate value, directors may be charged with breaching the duty of care of prudent managers. The Corporate Governance Code states that the Board of Directors should address both social and environmental sustainability issues and the development of an internal reporting system (see Introduction Appendix 3, "Corporate Governance Code Provisions Related to Engagement and Remedy").
3. Increasing Opportunities of Contributions for Japanese Business
In 2020, the Tokyo Olympic and Paralympic Games will be held and the Government of Japan's "National Action Plan on Business and Human Rights" (hereinafter referred to as the "National Action Plan") is scheduled to be finalized. The strengthening of the grievance mechanism of Japanese companies will contribute to development of the legacy of Tokyo 2020 and contribute to the enrichment of the content of the National Action Plan (see Introduction Appendix 1, "Background of the Development of these Guidelines").
In addition, the supply chains of Japanese business spread across Asia in addition to most other regions on the world. Thus, by way of the development of operational-level grievance mechanisms as grievance mechanisms through their supply chains, Japanese companies could address issues which arise along the supply chains or could require suppliers to have operational-level grievance mechanisms established. Also, such development of operational-level grievance mechanisms as grievance mechanisms of Japanese companies through their supply chains is a key lever for Japan to promote leadership in the region on the implementation of RBC and support in leveling the playing field when it comes to recognition and implementation of RBC polies and practices. These objectives in particular are also aligned with the current joint OECD, ILO, EU Programme on "Promoting Responsible Supply Chains in Asia" (See Appendix 4, “Relationship with "Responsible Supply Chains in Asia" Programme").
As described below, the Guidelines are comprised of (1) the main text of Engagement and Remedy Guidelines; (2) the Grievance Center Guidelines; and (3) the Basic Action for Engagement and Remedy Guidelines.
1. (1) "Engagement" and "Remedy" Guidelines (Text)
The Engagement and Remedy Guidelines specify the elements of ten standards of effectiveness relating to grievance mechanism under Guiding Principle 31, based on Japanese practice, and provide models aimed at strengthening grievance mechanism for Japanese companies.
The Guidelines consist of three chapters.
Chapter 1 presents the fundamental principles of grievance mechanisms.
Chapter 2 provides practical guidance on the development of grievance mechanisms in individual companies. Attention should be given to the governance of the mechanism, the scope of the mechanism, access to the mechanism, grievance mechanism procedures, ensuring transparency of the mechanism, and auditing, improvement, and learning of the mechanism.
Chapter 3 provides practical guidance on handling complaints in the supply chains. With regard to supply chain issues, it is necessary to have a tripartite dialogue between companies, suppliers, and stakeholders and to look for ways to handle complaints. This section presents specific points of note and provides a model clause for grievance mechanism provisions in supply chain contracts to facilitate implementation of grievance mechanisms.
2. (2) Grievance Center Guidelines
The Guidelines on Development of Collective Grievance Mechanisms provide practical guidance on the development of collective grievance mechanisms ("Grievance Center"). Although grievance mechanisms are normally handled by individual companies, it is beneficial to establish and operate a collective grievance mechanism in which multiple companies participate, depending on the size and circumstances of the company, and the reliability of such system can be enhanced when such collective grievance mechanism is run by an organization independent of each company. Therefore, these Guidelines provide the points to be noted when establishing such collective grievance mechanism (i.e., Grievance Center) with a focus on the difference between independent versus collective systems for complaint handling and the role of participating companies.
3. (3) Basic Action for Engagement and Remedy Guidelines
This basic action sets out basic actions to strengthen grievance mechanisms.
Many Japanese companies have clarified in their policy to address all the issues related with RBC addressed under the OECD Guidelines, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (hereinafter "the ILO MNE Declaration") and the Guiding Principles, including negative impacts on human rights in the supply chains, and have already established a whistle-blowing system for employees and a complaint process for consumers. On the other hand, there has been no progress in introducing grievance mechanisms that target a wider range of stakeholders and deals with internationally recognized RBC expectations which include human rights as well as environmental and social issues and across supply chains.
To the extent that a company can exercise its influence, ten basic actions are set forth below to strengthen grievance mechanisms in order to realize the promotion of RBC and supply chain. It will be useful for companies to first introduce grievance mechanisms based on this basic action, and then improve the system by referring to the Engagement and Remedy Guidelines through periodic reviews of the system to address all the issues related with RBC addressed under the OECD Guidelines, the ILO MNE Declaration and the Guiding Principles, including negative impacts on human rights in the supply chains.
The two Guidelines and the Basic Action do not prescribe norms that Japanese companies should generally comply with, but are intended to provide practical guidance based on current good practices in Japan and overseas regarding the complaint resolution system to serve as a reference for Japanese companies; they are not intended to be binding on Japanese companies. It is expected that Japanese companies will strengthen their current complaint handling systems by assessing the effectiveness of their complaint handling systems through these Guidelines.
It is also expected that stakeholders such as workers, investors, business partners, and civil society will refer to the Guidelines in evaluating externally a company’s complaint handling system and when engaging in dialogue with the company.
The Guidelines have been drafted by the Japan Responsible Supply Chains Committee, which is comprised of multi-stakeholder members including individuals engaged in business, investment, civil society, law, international organizations, and public organizations. The Japan Responsible Supply Chains Committee is operated and supported by the BHR Lawyers, the GCNJ and the BHR-NAP-CSP. We are grateful for the support and advice of the OECD’s Responsible Business Conduct Unit and the ILO Office for Japan in the formulation and dissemination of the Guidelines.
The Japan Responsible Supply Chains Committee is planning to publish the first version of the Guidelines upon carrying out public consultation with multi-stakeholders inside and outside Japan. Thereafter, we plan to engage in various activities for disseminating and improving the Guidelines, in collaboration with relevant institutions.
Japan Responsible Supply Chains Committee Overview
E&R Guidelines Project Overview